Buffalo, N. Y., Jan. 1, 1921.


At sight_____________________________________________pay to the

Order of The Electric National Bank______________________________

Five Hundred__________________________________________00/100 Dollars

Value received and charge the same to the account of

To Charles Bean-----------------------george Adams.

Bean owes Adams $500. Adams wants to collect the money. He gives his bank a written order against Bean for the sum, as in the example above. Adams, who writes the order, is called the"drawer," Bean the "drawee," and the bank the "payee." If, when the draft is presented to Bean for payment, - it reading, for example, "ten days after sight," - he writes the word "accepted" across the face of the draft, together with the date and his signature, Bean is called the "acceptor." By doing this Bean has made the draft his own written promise to pay, or practically the same as a note. This is called an " acceptance."

Very frequently drafts are drawn payable to the order of the " drawer." In the case above the word " myself " would take the place of "Electric National Bank." Now, however, as this draft has been made payable to Adams - the " drawer" - he must indorse it before it is negotiable. He may make it payable by indorsement to whomsoever he pleases, and to give it the same effect as the above form, he would indorse it in this manner: " Pay to the order of the Electric National Bank," followed by his signature. It will also be noticed that the form given is for a draft payable " at sight," as explained further on. A " time draft " would read, for instance, " Sixty days after date, pay to the order of," etc., or " Sixty days after sight, pay to the order of," etc., the latter meaning sixty days after presentation for " acceptance."

Drafts are of two kinds: "Sight " (or demand) and "time." If the former, they are payable on' presentation, unless " grace " is allowed, when they must be presented for " acceptance." (See that subject.) If " time," they are presented for " acceptance " to the party against whom drawn. A notice must always be left in case of his absence.

The payment of a "draft" is regulated by the laws of the State where payable.

Drafts may pass from hand to hand by indorsement, like a note. (Read also "Commercial Bill.") A "bill of exchange "(which see) is often referred to as a "draft."